The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between IEMG and VXF? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than VXF’s (0.11% vs. 0.06%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VXF over the past ten years.
In this article, we’ll compare IEMG vs. VXF. We’ll look at holdings and industry exposure, as well as at their performance and risk metrics. Moreover, I’ll also discuss IEMG’s and VXF’s portfolio growth, fund composition, and annual returns and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Vanguard Extended Market Index Fund ETF Shares|
|Category||Diversified Emerging Mkts||Mid-Cap Growth|
The iShares Core MSCI Emerging Markets ETF (IEMG) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 83.68B total assets under management and has yielded an average annual return of 7.41% over the past 10 years. The fund has a dividend yield of 1.78% with an expense ratio of 0.11%.
The Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
IEMG’s dividend yield is 0.59% higher than that of VXF (1.78% vs. 1.19%). Also, IEMG yielded on average 8.07% less per year over the past decade (7.41% vs. 15.47%). The expense ratio of IEMG is 0.05 percentage points higher than VXF’s (0.11% vs. 0.06%).
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The iShares Core MSCI Emerging Markets ETF (IEMG) has the most exposure to the Technology sector at 20.44%. This is followed by Financial Services and Consumer Cyclical at 16.9% and 15.67% respectively. Real Estate (2.75%), Energy (4.71%), and Consumer Defensive (5.68%) only make up 13.14% of the fund’s total assets.
IEMG’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.73%, 5.92%, 8.64%, 11.41%, and 15.67%.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
IEMG is 3.17% less exposed to the Technology sector than VXF (20.44% vs 23.61%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 4.34% higher and 4.32% higher respectively (16.9% vs. 12.56% and 15.67% vs. 11.35%). In total, Real Estate, Energy, and Consumer Defensive also make up 0.57% less of the fund’s holdings compared to VXF (13.14% vs. 13.71%).
|Taiwan Semiconductor Manufacturing Co Ltd||5.37%|
|Tencent Holdings Ltd||4.42%|
|Alibaba Group Holding Ltd Ordinary Shares||4.38%|
|Samsung Electronics Co Ltd||3.49%|
|Naspers Ltd Class N||0.93%|
|Reliance Industries Ltd Shs Dematerialised||0.83%|
|China Construction Bank Corp Class H||0.77%|
IEMG’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Samsung Electronics Co Ltd, and Meituan at 5.37%, 4.42%, 4.38%, 3.49%, and 1.52%.
Naspers Ltd Class N (0.93%), Vale SA (0.91%), and Reliance Industries Ltd Shs Dematerialised (0.83%) have a slightly smaller but still significant weight. China Construction Bank Corp Class H and Infosys Ltd are also represented in the IEMG’s holdings at 0.77% and 0.74%.
|Square Inc A||1.2%|
|Zoom Video Communications Inc||1.04%|
|Uber Technologies Inc||0.93%|
|Blackstone Group Inc||0.83%|
|Snap Inc Class A||0.8%|
|Twilio Inc A||0.73%|
|CrowdStrike Holdings Inc Class A||0.63%|
|Marvell Technology Inc||0.6%|
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Sharpe Ratio is 0 while IEMG’s Mean Return is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Alpha of -3.26 with a Standard Deviation of 18.04 and a Beta of 1.23. Its Treynor Ratio is 10.92 while VXF’s Mean Return is 1.24. Furthermore, the fund has a Sharpe Ratio of 0.79 and a R-squared of 85.73.
IEMG’s Mean Return is 1.24 points lower than that of VXF and its R-squared is 85.73 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VXF. The Alpha and Beta of IEMG are 3.26 points higher and 1.23 points lower than VXF’s Alpha and Beta.
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IEMG had its best year in 2017 with an annual return of 36.78%. IEMG’s worst year over the past decade yielded -14.69% and occurred in 2018. In most years the iShares Core MSCI Emerging Markets ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2013 was the strongest year for VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IEMG would have resulted in a final balance of $15,037. This is a profit of $5,037 over 7 years and amounts to a compound annual growth rate (CAGR) of 7.41%.
With a $10,000 investment in VXF, the end total would have been $21,894. This equates to a $11,894 profit over 7 years and a compound annual growth rate (CAGR) of 15.47%.
IEMG’s CAGR is 8.07 percentage points lower than that of VXF and as a result, would have yielded $6,857 less on a $10,000 investment. Thus, IEMG performed worse than VXF by 8.07% annually.
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